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Friday, December 21, 2012

In the Wall Street Journal today, an op-ed: “Will the Carbon Tax Make a Comeback?” by William O’Keefe, CEO of the Marshall Institute and a
former executive of the American Petroleum Institute.

It begins with some triumphalism about the defeat of Bill
Clinton’s proposed BTU tax almost 20 years ago, which O’Keefe describes as “a
similar gambit” to a carbon tax. O’Keefe writes:

The proposal provoked a brutal backlash, to the surprise of
no one but the Clinton White House, environmental advocates, and liberal
members of Congress such as Henry Waxman (D., Calif.). The vocal anti-BTU
coalition included small businesses, the agriculture sector, the building
trades, the transportation industry, manufacturers and even social-service organizations
that relied on gasoline and heating oil to care for the poor and homeless.

A few months after Mr. Clinton proposed the tax, the
administration and Democrats in Congress abandoned the idea. As the great
English writer Samuel Johnson observed, there is nothing like a hanging to
concentrate the mind. "BTU" became a verb, and from then on no
politician wanted to be "BTU-ed." A year later, in November 1994,
voters gave control of the House to Republicans for the first time in decades.

Me: Ah, good times, good times. Actually, wait a second. The
BTU tax would’ve been imposed on a broad range of energy sources including
non-carbon ones such as nuclear and hydropower, and had no mitigating cuts in
taxes elsewhere. A carbon tax, aimed at promoting non-carbon energy sources and
coupled with cuts in income and payroll taxes, might get a very different
reception.

Here’s more O’Keefe:

A carbon tax is intellectually elegant to economists but
dangerous and complex in practice. The theoretical basis is to raise taxes on
things considered bad (carbon from energy consumption) and to lower taxes on
things considered good (labor, for example).

But energy is consumed to produce things that people value,
and there are no near-term substitutes for fossil fuels. So a carbon tax would
affect food prices, consumer goods, electricity, mobility, charitable works and
more. It would also destroy jobs, and a recent study by the Congressional
Budget Office concluded that it would "impose a larger burden on
low-income households.

Me: Yes, “energy is consumed to produce things that people
value,” but some types of energy produce vast social and environmental costs
that a carbon tax would make better reflected in energy prices. Why not let
people keep more of their money to begin with, and then choose (directly and
indirectly) among energy sources?

As for there being “no near term substitutes for fossil
fuels,” that is a straw-man argument. There are some non-carbon substitutes for
fossil fuels and importantly there are also lower-carbon fossil fuel
substitutes for higher-carbon fossil fuels. A carbon tax would accelerate the
recent push toward more use of natural gas. The goal is not some green utopia
but rather a more sustainable mix of energy sources.

O’Keefe:

A carbon tax is a slippery slope. Once in place,
small changes in rates would yield large increases in federal revenue. Who is
naive enough to believe that Congress wouldn't be tempted to make small
increases that accumulate over time?

Me: Yes. There should be small increases that accumulate
over time. In fact, there should be a schedule of such increases, so as to
minimize shocks to the economy and encourage investment in cleaner energy.
Gradualism would be a virtue in a carbon tax, not the insidious menace O’Keefe
portrays.

O’Keefe:

What's more, the climate-change justification for
a carbon tax is bogus. Greenhouse-gas emissions are rising in China and other
emerging economies, not in the United States. Carbon-dioxide emissions in the
U.S. have been declining and by 2035 will return to 2005 levels, the Energy
Information Administration projects.

Advances in climate science, meanwhile, raise even
more doubt about the assertion that human activities are the primary cause of
warming. Former NASA scientist Roy Spencer, for example, has shown that
temperatures since 1976 have risen and stabilized in parallel with the Pacific
Decadal Oscillation, a natural climate pattern affecting all sorts of natural
phenomena. An increasing number of experts now admit that natural variability
is poorly understood and poorly reflected in the models that are the foundation
of so much climate-change dread.

Me: There remains a strong consensus among experts
that human-caused greenhouse gas emissions are the primary driver of climate
change--and O'Keefe's wording is rather slippery, as the number of contrarian experts could be increasing while remaining very low, and as acknowledging uncertainties about natural variability does not equate to thinking they plausibly could account for global warming. Also, fossil fuels, especially coalandoil,
indisputably cause vast damage to humans and the environment even apart from
climate change. But O’Keefe’s resort to the science denialism card is
revealing. It suggests that he and his editors perceive that his case against a
carbon tax can’t stand up without that crutch.

Friday, December 14, 2012

Almost a decade ago, I was nudged away from skepticism about anthropogenic global warming after writing an article for TCSDaily (aka Tech Central Station) titled "Cosmic Ray Days." I was reporting on some research that suggested cosmic rays could be an important factor in climate change, but I also noted the uncertainties involved and that one of the scientists doing the research still thought human activity might account for a third to a half of the warming at that point. My skepticism took a hit when TCS soon thereafter published a piece, based on the same research, that claimed that "a great mystery has been solved" and nonchalantly tossed away all the evidence for human activities being central.

Anyway, some people are still playing up the cosmic ray angle, regardless of its weakness.

I don't talk or write about gun controls much. I don't have a detailed opinion as to exactly where the lines should be drawn, as to what's legal and who's allowed to have them. But it's clear enough to me (and more so today than ever before) that the lines are in the wrong place now; that it's much too easy for dangerous people to get powerful weapons; and that some of these horrible events can be prevented. I agree with the gist of the following posts:

Recommended reading: "Property Rights in Space," by Rand Simberg at The New Atlantis. I've long been interested in this subject, including with writings here and here. I would be delighted to see someone in Congress make a determined effort to press something like the Space Settlement Prize Act. Anyway, keep an eye on this issue; it just might be starting to glow brighter on the political radar screen.

Thursday, December 13, 2012

Some subjects are very important and also too complicated, technical and boring to get the public attention and comprehension they deserve. Monetary policy generally falls into that category. Basically, what's happening currently is the Fed has decided to keep it loose--to expand the money supply, or loosely speaking "print money"--until unemployment falls below 6.5%. In so doing, the Fed is following a "rule"; in other words, it is making a specific statement as to what it intends to do, as opposed to using vagueness to maintain some flexibility as to how it will act in the future.

This combination of loose monetary policy and an explicit rule puts the Fed at odds with one longtime strand of conservative thinking about monetary policy, and in alignment with another strand of conservative thinking. Many conservatives have had an affinity for tight monetary policy, dating back to the Volcker clampdown on inflation in the early 1980s. Many conservatives also have had an affinity for rules over discretion--for limiting in some way the central bank's flexibility on how to set policy.

Those two tendencies often have fit hand in glove, in a purist form with conservative advocacy of a gold standard--an arrangement that would tighten monetary policy (greatly) and get rid of policymakers' discretion (indeed, get rid of the central bank altogether, many gold standard advocates prefer).

There are some problems, though, with gold standards or lesser forms of tight money/less discretion policy. One is that tight money can be destructive in a slow-growth economy. Another is that it's very hard to ensure policymakers actually do limit their discretion (they could always revise a rule or, as has been done historically, abandon a gold standard).

By adopting a loose-money, but rule-based, approach, the Fed can be expected to continue getting resistance from tight-money conservatives--but to get some support from conservatives attracted to the rule aspect. (See, as an example, "Two cheers for the Bernanke rule," by James Pethokoukis.)

That could shake up the politics of monetary policy somewhat, in that castigating the Fed for "inflating the currency" has been pretty much de rigeur on the right in recent years (agreed on by most if not all of the GOP presidential candidates last time around, including Romney); possibly we'll now see some emphasis on the rule aspect, and less castigation of the Fed going forward. Of course, that assumes the Fed sticks with its rule. In any case, here's hoping (a) that the policy is effective in helping the economy, and (b) that the GOP will move back somewhat to its onetime role of defender of the Fed against populist sentiments.

Tuesday, December 11, 2012

Everything about the Fox News segment above is lamentable, from the graphics at its outset ("Regulation Nation" with a rubber stamp voiding "jobs") through the end of Steve Doocy's interview with Rep. Fred Upton (R-Mich.). Doocy explains that a carbon tax involves taxing "things that go up in the air" and is "crazy." Upton manages to mis-describe a carbon tax as the same thing the Democrats failed to pass in 2010, thus conflating it with a cap-and-trade system; he vows to stop this "mole" from rearing its head ever again, cheerfully ignoring his own past contention that everything should be on the table for reducing carbon emissions. No viewer who watches this comes away with any better sense of what's involved, what the choices and tradeoffs actually are. It's all just "crazy" and deeply stupid.

Friday, December 7, 2012

There's an opportunity here that Republican politicians are missing: to point out that the Democratic Party's favored climate strategy, cap and trade, has been a failure internationally. In fact, it was a failure that resulted from trying to take a sound idea (which worked well enough on localized problems such as acid rain) and apply it to a global problem for which it was ill-suited. Of course, to make the most of this opportunity, the GOP politicians would have to be willing to (a) acknowledge that global warming is a problem and (b) present their own solution, in particular a carbon tax. (Of course, the rhetoric of recent years of cap and trade being "cap and tax" has generated public confusion about the distinction.)

Thursday, December 6, 2012

It's getting uncomfortably crowded in RINO territory. Here's Jennifer Rubin bidding a not-fond farewell to Sen. DeMint. Here's some of the reaction. For my part, I'll add, per my post below, that DeMint does not endanger some existing set of towering intellectual standards. Anyway, hang on tight; it's going to be an extraordinarily interesting time in and around the conservative movement the next few years.

Yesterday I happened across a Heritage Foundation post "Carbon Tax a Recipe for Economic Disaster," and was struck by its lameness, its pile of assertions without analysis. I clicked through the links and found some other Heritage pieces that too had little analysis and less that was persuasive or even relevant. "A Carbon Tax Would Harm U.S. Competitiveness and Low-Income Americans Without Helping the Environment" is the most substantive piece there but still is very lacking: it can't be bothered to assess such possibilities as that a carbon tax would be coupled with cuts in other taxes; it relies on boilerplate denialism such as "the field of climate science is far from settled"; it presents a graph showing the effects of a defunct cap-and-trade bill as a stand-in for analysis of a carbon tax, and while noting that U.S. action would be ineffective in restraining climate change without international action, makes a hand-waving assumption that there's no possibility of such action even if the U.S. puts an import fee on goods from countries without a carbon tax. How do you know that, Heritage?

Anyway, reading that stuff put me into somber reflection on the sorry state of much think tank "analysis." Today I see Heritage is getting a new president, as Sen. DeMint makes an early departure from the Senate. Sadly, it does not look like this change will spur any rethinking--or first thinking--on climate and carbon; but maybe some future Heritage papers will press the "it's snowing" line ofobscurantism.

Wednesday, December 5, 2012

In my recent talk on "Science vs., Politics" at the Philadelphia Association for Critical Thinking (PhACT), I argued, among other things, that science denialism in the GOP has probably peaked, such that we'll likely see an effort by Republican politicians to shed the political liability of being seen as the antiscience party. Today I am pleased to see Marco Rubio doing just that (and it is to his credit, as there's no honor in denying scientific facts).

Monday, December 3, 2012

David Frum makes a case--and it's a powerful case--for taxing carbon. Unfortunately, there isn't currently an administration in place that's willing to take such a step (and unlike the recent Republican challenger, the president does not have economic advisors known for high-profile advocacy of a carbon tax).

I would emphasize a point David makes, which is a central insight of the recent book The Carbon Crunch(which I've only had a chance to skim so far), that a carbon tax must fall ultimately on consumption, not just production. In other words, it's futile and counterproductive to put a tax on a factory in one country that just encourages the company to move to a country without a carbon tax. Rather, goods must be taxed as they enter the importing country, if they're made someplace without the tax.